The UK banking sector faces criticism over alleged breaches of mandatory repayment rules for fraud victims, following the collapse of investment scheme 79th Group into administration in April. The Payment Systems Regulator (PSR) is currently “engaging with” the industry in response to complaints that banks are delaying compensation decisions for customers who transferred funds to the suspected £200 million Ponzi scheme. Regulations introduced in October 2024 require financial firms to reach a decision within 35 business days when victims of authorised push payment (APP) fraud submit a claim, with the “vast majority” of cases to be refunded within five business days. However, representatives for 79th Group investors claim that banks have “ringfenced” more than 3,700 related claims, citing the need for “industry guidance”, which has left many – including retired, first-time investors – without access to their savings for months.
Background: 79th Group Collapse and APP Fraud Claims
79th Group entered administration in April following a City of London Police investigation into “suspected widespread fraud”. According to Grant Thornton administrators, the company operated as a Ponzi scheme, with investor funds used “for a variety of expenditure” instead of being secured against property as suggested. Four individuals have been arrested and released on bail in connection with the inquiry. Insolvency practitioners estimate that over £200 million was owed to approximately 3,700 investors.
- UK payments landscape
- Fast payout options for UK casino players
- Common withdrawal issues
- E-wallets for safer transactions
- Account verification and fraud protection
Regulatory Requirements and Industry Response
UK rules for APP fraud, effective from 7 October 2024, mandate that reimbursement decisions be provided within 35 business days. In “complex” scenarios, firms are permitted to “stop the clock”, but an outcome is still due within this timeframe. The PSR has clarified that there are “not currently any exceptions to this”. Despite these requirements, banks including HSBC have communicated to customers that claims relating to 79th Group are “ringfenced” while they await further “industry guidance”. The banking industry trade body, UK Finance, stated that this approach aims “to ensure consistent outcomes”, holding claims until additional information becomes available.
| Key Rule | Standard Deadline | Current Practice |
|---|---|---|
| APP fraud reimbursement | 35 business days | Claims held “pending guidance” |
| Vast majority of payouts | 5 business days | Delayed for 79th Group victims |
| Exceptions | “Stop the clock” allowed in complex cases | No formal exemption for ringfencing |
Concerns Raised by Victims and MPs
Case studies, such as that of NHS worker Jane Karley—who invested £75,000 with 79th Group—highlight growing frustration. Karley was told by HSBC that her case was complex and under investigation, with little response since April. She recounted a bank staff member saying, “We are awaiting industry guidance on cases based against the 79th Group … it is ringfenced. It is very big … It is an awful case, you are not the first victim.” Karley expressed disappointment at the lack of communication and questioned why anti-fraud protections did not prevent her loss, stating, “I worked all my life to save for that, it was my pension fund. I don’t know what the future holds for me.”
Sir John Whittingdale MP commented that “industry co-ordination should not be reason to stop the statutory clock”, and he voiced concern for “unsophisticated, retired first-time investors [who] … put their savings into a well-planned scam”. According to the PSR, it is monitoring compliance but does not track “open claims” like those still pending for 79th Group.
Further Reading and Resources
- FCA fees and payment firm regulation
- PayPal account rule changes for UK users
- Overview of withdrawal methods
- Safe online casinos practices
Industry data shows that APP scams cost UK victims £451 million in 2024. The mandatory reimbursement model can refund up to £85,000 per victim. For payments made before October 2024, a voluntary model applied, typically providing an outcome within 15 days. The ongoing 79th Group case spotlights challenges in enforcing new regulation and balancing thorough investigation with timely redress for those affected (source).
